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successful decisions

Epistemological Modesty

Rational or emotional?

Rational or emotional?

I used to be a rationalist. I enjoy math and statistics and I always thought that any problem could be rationally (and quantitatively) parsed, if only we could frame it correctly. The issue, as I saw it, was not our quantitative, logical tools but rather the slippery ambiguity of our language. If we could only make our language as precise, logical, and, yes, quantitative as our tools, we could make huge strides in understanding our world and solving the problems of living together.

Although I enjoy languages, I thought numbers were better. Numbers are precise, rational, and universal. Language, other the other hand, is beautiful but also sloppy. It’s so difficult to convey certain concepts and emotions. You have to approach them elliptically, as novelists do rather than head-on as mathematicians do.

I also assumed that rational thought was superior to all other forms of thought. If only we could be rational and banish emotions from our decision making, we would be far better off.

Now I’m not so sure. The more I read about our brain and the way we make decisions, the more I’ve adopted epistemological modesty (EM). EM is one of those ideas that is fairly easy to understand but more difficult to adopt as a way of thinking and living.

Epistemology asks a simple question: how do we know what we know? I used to think that the best (perhaps the only) way to truly know something was through rational thought and logical deduction. I also thought that rationalism would ultimately – sometime in the distant future – allow us to know everything.

I was very sure of my position. Now I’m much more modest. EM (also known as epistemological humility or relativism) suggests that: 1) there are multiple paths to knowledge, and; 2) there are limits to our knowledge – even teenagers can’t know it all.

I used to think that rational thought was the best way to make decisions. It turns out that most of our decisions are made without any conscious thought whatsoever. Our subconscious does the work. Our best decisions are often based on emotions rather than logic. In fact, there’s a growing body of evidence that we don’t use logic to make decisions at all. We use logic to justify decisions. We use emotions to make them.

As I become more modest in my approach to knowledge, I also wonder whether rationalism doesn’t sometimes cause our problems rather than solve them. Our business schools teach a very rational approach to business. Just put it into a spreadsheet and you can manage it successfully. Yet, as business thinkers ranging from Peter Drucker to Paul Nutt point out, most of our business decisions are just plain wrong. Perhaps it’s because we’re too much in love with the rational, quantitative, and logical approach.

In my critical thinking classes, I teach that the first thing to do in making a decision is to step back and look around. Consider multiple alternatives rather than just one. Perhaps it’s time to do the same thing with the way we think. Let’s step back and think about our thinking. Let’s not assume that there’s one right way to think. By being epistemologically modest, we may just think our way to a better place.

Leadership: Why Decisions Succeed

train tracksIn my critical thinking class, we’ve been using Paul Nutt’s book, Why Decisions Fail. It’s an interesting look at debacles … “botched decision[s] that attract attention and get a public airing.” In the coming weeks, I’ll draw some examples from Nutt’s database of famously bad decisions.

While I like the book in many regards, I think it’s a mistake to study only failures. Hopefully, business is about more than avoiding something negative. It’s also about attaining something positive. So I’ve been looking for a counterpoint — a study of why decisions succeed. I haven’t found a comprehensive study, but I did find an intriguing article from Boston Consulting Group, “Winning Practices of Adaptive Leadership Teams.” The BCG researchers interviewed 93 executives and identified five traits of successful executive teams. Here they are:

One voice — effective leadership teams “take the time to get completely aligned about the organization’s vision, values, and vital priorities, while respecting individual differences of opinion and experience.” While this implies good communication and mutual respect, it also implies that each team member has an enterprise-wide sense of responsibility. As one executive put it, “If my division is successful, but another division is not, I would not regard that as a victory.”

Sense-and-respond capacity — the most effective teams spend a lot of time surveying the environment, identifying trends, and synthesizing information. Among other things, they make heavy investments in information technology and pattern seeking software. The goal is to successfully “… monitor the external forces that drive change in their business environment.”

Information processing — the investment in IT often generates a large volume of data. The adaptive team then has to process it to create useful information. The team needs to share the data effectively and debate it transparently. Several teams developed “…highly disciplined meeting designs and agenda formats to ensure that they routinely exchange key information through a streamlined process that breaks down silos of communication.” Many teams also emphasize “overcommunication”.

Freedom within a framework — several teams spoke of “guardrails”. Within those guardrails, executives have a lot of room to maneuver; they can make their own decisions on how to get things done. As they prove themselves, the team widens the guardrails. Within the guardrails, “…failure [is] seen as a possible and an acceptable outcome. Failure is debilitating only if the lessons learned are not disseminated and applied quickly.”

Boundary fluidity — executives move both horizontally and vertically. There’s a sense that successful executives are “utility players” — any executive could fill in for any other executive if need be. There’s also a sense that silos are self-defeating. As one executive put it: “We always try to move people around so that their perspectives evolve and things don’t get stale.”

So does it work? BCG has developed an Adaptive Advantage Index and applied it to over 2,200 public companies in the U.S. The index is strongly correlated to growth in market capitalization.

Why Decisions Fail can tell you what not to do. That’s an important perspective. On the other hand, the BCG study (and others like it) can tell you how to succeed. In my opinion, that’s more important. I’d rather focus on succeeding than not failing.

 

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